Eskom doesn’t expect current shortages of coal to force a return to rolling blackouts as it sources extra stocks and moves around existing supplies of the fuel.
The state-owned company supplies almost all of South Africa’s electricity and the coal shortages come as the utility prepares for the seasonal increase in power demand.
The company has also grappled with allegations of corruption and mismanagement and struggled to raise the funding it needed earlier this year. A repeat of power cuts from three years ago would quash signs of an economic recovery.
Eskom, which had its board overhauled in January, continues to investigate allegations of wrongdoing, plans to complete work on a comprehensive long-term strategy by September and believes that forced blackouts this year are unlikely, interim CEO Phakamani Hadebe told reporters in Johannesburg. The company received positive feedback in recent meetings with foreign and local investors, although concerns remain, he said.
“We are not saying that it’s smooth sailing,” Hadebe said. “We need to take painful, difficult decisions.”
The number of power stations with low coal stocks has now fallen to six from seven and may decline further within a couple of weeks, he said.
To address the coal-supply issue in the longer term, Eskom has issued a request for proposals for 100m metric tons of coal over five to six years and those contracts are being evaluated, executives said. The company is currently about 84% contracted for the period to 2025, with a shortfall of some 15%/year.
It’s also set a budget to invest in so-called cost-plus mines over the next three years and is starting negotiations on 60-year supply for its new Kusile power station. Cost-plus refers to arrangements where mining companies manage and operate mines supplying Eskom at a fee and the utility provides capital. — Reported by Odwa Mjo and Ntando Thukwana, (c) 2018 Bloomberg LP